Alibaba Group’s shares on Monday dropped by 9 per cent taking the tally to the lowest ever mark since June 2020. This downgrade in shares came after Alibaba’s upsized $10 billion buyback programme failed to ease the concern of shareholders about the regulatory crackdown on co-founder Jack Ma’s financial empire by the Chinese authorities. Ma has now lost a total of $11 billion since the last two months.
There has been a continuous crackdown on Jack Ma’s e-Commerce empire by the Chinese authorities ever since he criticised governments regulatory policy claiming that these guidelines are gagging innovation.
China’s crackdown on Jack Ma’s Alibaba empire:
- The crackdown intensified when the Chinese regulators on Thursday announced the launch of an antitrust investigation into Alibaba. After the announcement of the investigation, Alibaba’s shares in the Hong Kong share market plunged by a staggering $116 billion dollars.
- Although the Chinese regulators have not released details about the antitrust probe against Jack Ma, it has been known that it is related to the ‘pick one of two’ policy by Alibaba. It can be said that it is an exclusivity agreement to force merchants to sell only on Alibaba, ensuring that they do not do so on other rival platforms, such as Tencent.
- Chief investment officer of Beijing Yunyi Asset Zhang Zihua said that the antitrust investigation into Alibaba has yet to specify the penalties, which worrying investors a lot. He further said that a probe outcome could “greatly change” the company valuations.
- The crackdown also intervened in Ma’s ambitious plan of launching Ant group’s Initial Public Offering(IPO). The regulators abruptly suspended Ant Group’s $37 billion IPO just two days before its planned debut in Shanghai and Hong Kong. This IPO was on its way to be the world’s largest.
- Alibaba shares could trade lower in the near term due to the "regulatory overhang", Nomura Holdings said in a note on Monday. But the cheaper value will be attractive for long-term investors, Nomura Holdings added as it kept a "buy" rating on Alibaba's US-listed stock and retained a target price of $361. The stock closed at $222 on Thursday.
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